Key takeaways
- The personal allowance has been £12,570 since 2021-22. Indexed to September CPI under the statutory default, it would be £16,080 in the 2026 to 2027 tax year.
- That gap costs £983 in income tax and National Insurance on a £20,000 salary this year, £2,345 on £60,000 and £2,972 on £100,000.
- The higher rate tax threshold would sit at £64,480 rather than £50,270 now, and at £70,270 by 2030-31 on the OBR's March 2026 inflation forecast.
- Freezing the £50,270 upper earnings limit cuts National Insurance for higher earners. A £100,000 salary pays £572 less than it would on indexed thresholds.
- HMRC scores the 2028 to 2031 leg of the freeze at £12,435 million in 2030-31, and expects it to bring 700,000 people into income tax.
What the income tax threshold freeze costs at six salaries
You came for the number that applies to your own pay, so here it is before the mechanism. The table compares the income tax and employee National Insurance you pay in the 2026 to 2027 tax year against what you'd pay if the personal allowance and the basic rate limit had been uprated with inflation every April since 2021-22. That uprating is the legislative default. Parliament has switched it off.
| Salary | Extra income tax | Extra National Insurance | Total | Share of gross pay |
|---|---|---|---|---|
| £20,000 | £702 | £281 | £983 | 4.9% |
| £35,000 | £702 | £281 | £983 | 2.8% |
| £50,000 | £702 | £281 | £983 | 2.0% |
| £60,000 | £2,648 | -£303 | £2,345 | 3.9% |
| £100,000 | £3,544 | -£572 | £2,972 | 3.0% |
| £125,000 | £3,544 | -£572 | £2,972 | 2.4% |
Three of those six salaries produce an identical figure, and that isn't a rounding artefact. It's the whole shape of the thing. Two rows carry a negative National Insurance number, which surprises most people. Both oddities have the same cause: the income tax threshold freeze is two frozen numbers doing different jobs, and they don't pull in the same direction. Each gets its own section below.
Where the higher rate tax threshold would be without the freeze
Section 57 of the Income Tax Act 2007 indexes the personal allowance. It applies, in the statute's words, "if the consumer prices index for the September before the start of a tax year is higher than it was for the previous September". The increase is then rounded up to "the nearest amount which is a multiple of £10". Section 21 does the same job for the basic rate limit, rounding the result up to a multiple of £100.
So the counterfactual isn't a guess. It's an arithmetic rule with one input: the September CPI annual rate, published by the ONS as series D7G7. Those prints were 3.1% for September 2021, 10.1% for September 2022, 6.7% for September 2023, 1.7% for September 2024 and 3.8% for September 2025.
Run them through the two rounding rules from the 2021-22 starting point of £12,570 and £37,700, and the personal allowance reaches £16,080 by 2026-27. The basic rate limit reaches £48,400. Add them and the higher rate threshold for income tax would be £64,480, against the £50,270 actually in force. That's a gap of £14,210, and £3,510 of it sits in the allowance alone.
The chart plots that path year by year. September 2022 does most of the work: a single 10.1% print would have added £1,310 to the allowance and £4,000 to the basic rate limit in one go.
Why a £20,000 salary loses a bigger share than a £50,000 salary
A basic rate taxpayer only feels the allowance half of the freeze. Their income never reaches the higher rate threshold, so where that threshold sits is irrelevant to them. The £3,510 of missing allowance is taxed at 20% instead of nothing, which is £702, and it also falls above the National Insurance primary threshold, which adds 8% of £3,510, or £281.
That's £983 whether you earn £20,000 or £50,000. It's a flat cash amount, so as a share of gross pay it falls from 4.9% at £20,000 to 2.0% at £50,000. Fiscal drag, the process by which frozen thresholds pull income into tax as pay rises, is at its sharpest in cash terms for people near the bottom of the income tax base. HMRC's own impact note expects the 2028 to 2031 stretch alone to "bring 700,000 individuals into Income Tax by 2030 to 2031, compared to if these thresholds were indexed with CPI from 2028 to 2029 onwards".
Above £50,270 a second effect starts. The £60,000 earner loses £2,648 of income tax, and it splits in two. £1,404 is the missing allowance, which for them sits in the 40% band rather than going untaxed. The other £1,244 is £6,220 of pay that falls into the 40% band only because the basic rate limit didn't move. On indexed thresholds that salary would be a basic rate salary outright. The UK investment tax rates and allowances table sets out the bands each of these figures is built from.
The frozen upper earnings limit is a National Insurance discount for higher earners
Here's the part that runs the other way. Employee National Insurance is 8% between the primary threshold and the upper earnings limit, then 2% above it. The upper earnings limit is pinned to the higher rate threshold, and HMRC's note confirms it "will remain aligned to the higher rate threshold at £50,270" until 2030-31.
Freezing that limit means the 2% band starts earlier than it otherwise would. A £60,000 earner has £9,730 of pay above £50,270 charged at 2%. On indexed thresholds the ceiling would be £64,480, so all of it would sit in the 8% band instead, at a cost of £584. Against that, a primary threshold of £16,080 rather than £12,570 would have saved them £281. Net, the freeze leaves them £303 better off on National Insurance and £2,648 worse off on income tax.
At £100,000 the discount is £572 and the income tax cost is £3,544, for a net £2,972. So the freeze isn't a uniform tax rise layered on every earner. It's a transfer that lands hardest where the allowance matters most and is partly rebated to anyone earning above £50,270. Nobody designed that rebate; it falls out of pinning two different thresholds to the same number. The mechanics of that 8% band are worked through in our piece on whether salary sacrifice is worth it.
The personal allowance frozen until 2031 and what 2030-31 looks like
Budget 2025 extended the freeze. HMRC's impact note, published on 26 November 2025, states that the personal allowance and basic rate limit "will be maintained at their current levels until 5 April 2031", and that "the current legislative default is for the PA and the basic rate limit to increase in line with the Consumer Price Index (CPI) from 6 April 2028 onwards". So the personal allowance frozen until 2031 is settled law, not speculation.
Projecting the counterfactual forward needs an inflation path. The OBR's March 2026 Economic and fiscal outlook has CPI inflation falling "from 3.4 per cent in 2025 to 2.3 per cent in 2026, and 2.0 per cent from 2027 onwards". Apply that to the same two rounding rules and the indexed allowance reaches £17,470 in 2030-31, with a basic rate limit of £52,800. The higher rate threshold would be £70,270, exactly £20,000 above the frozen figure.
| Salary | Extra income tax | Extra National Insurance | Total in 2030-31 |
|---|---|---|---|
| £20,000 | £980 | £392 | £1,372 |
| £35,000 | £980 | £392 | £1,372 |
| £50,000 | £980 | £392 | £1,372 |
| £60,000 | £2,926 | -£192 | £2,734 |
| £100,000 | £4,980 | -£808 | £4,172 |
| £125,000 | £4,980 | -£808 | £4,172 |
Those four years are a scenario, not a measurement. The September prints that would drive them haven't been published. HMRC scores the same measure at £3,365 million in 2028-29, £7,780 million in 2029-30 and £12,435 million in 2030-31, figures "certified by the Office for Budget Responsibility".
What the freeze adds up to across the decade
Stack the annual income tax costs and you get the cumulative bill. Holding the salary flat in nominal terms across the whole period, a basic rate salary gives up £2,236 of income tax over the five years to 2026-27, and £5,744 over the nine years to 2030-31. A £60,000 salary gives up £9,772 and £21,064. A £100,000 salary gives up £11,292 and £29,088.
The flat-salary assumption is the weak point, and it understates the result rather than flattering it. If your pay had risen by each of those same September prints from 2021-22, a £50,000 salary would be £63,929 by 2026-27 and would have crossed the frozen higher rate threshold years earlier. On that path the 2026-27 cost is £2,895 rather than £983. Which of those two pictures fits you depends on your own pay history, and these figures cannot tell you that.
One threshold in the table never moves in either scenario. The £100,000 point at which the allowance starts to be withdrawn, at "£1 for every £2 that your adjusted net income is above £100,000", is not in the list of amounts section 57 indexes. Section 35(2) has carried the same £100,000 since the Finance Act 2009 inserted it. Above it, each extra pound is taxed at 40% and also strips 50p of allowance that is then taxed at 40%, which is the 60% effective rate people run into, and inflation alone walks more pay into it every year. That is part of why the ISA versus pension decision at each tax band shifts so sharply around that point.
What is legislated and what is still only reported
Three parts of the income tax threshold freeze are settled law. The allowance and basic rate limit are £12,570 and £37,700 to 5 April 2031. The higher rate threshold is £50,270 across the same years. The National Insurance primary threshold stays aligned to the allowance and the upper earnings limit to the higher rate threshold.
Anything about the freeze running past April 2031 is commentary, and no figure here rests on it. HMRC's own wording is that the thresholds "would rise in line with CPI thereafter", which is the default, not a promise. Nothing in this piece assumes an extension, because there is nothing published to assume.
The strongest objection to reading the freeze this way
Critics of pricing the income tax threshold freeze this way have a real point, and it's worth stating properly. Calling the gap a cost treats CPI indexation as an entitlement you were deprived of. It isn't. It's a statutory default that Parliament can and does override, and it has been overridden repeatedly: Finance Act 2021 fixed the thresholds to April 2026, Finance Act 2023 carried them to April 2028, and Budget 2025 took them to April 2031. On that reading the counterfactual is a legal formality, not a baseline anyone was owed.
There's a second objection. Revenue not raised here would have to be raised somewhere, or spending cut, so the honest comparison isn't freeze against nothing. It's freeze against a rate rise that HMRC never had to legislate. That's exactly why freezes are used, and it's a fair criticism of the arithmetic rather than of the policy.
Where we'd push back is on visibility. A rate change is announced, debated and understood. The measure being scored at £12,435 million in 2030-31 reaches the same place with a document most people never read. The number in your payslip moves either way.
What would change these numbers
Inflation is the live variable, and it's running above the path used here. The ONS reported CPI at 3.1% in the 12 months to August 2026, against the OBR's March 2026 forecast of 2.3% for the year and 2.0% from 2027. Higher inflation makes the frozen thresholds bind harder, so the 2030-31 column is closer to a floor than a central estimate on current prints. The next CPI release is due on 21 October 2026.
Two other things would move the figures. An end to the freeze before April 2031 would cut the later years, and a further extension beyond it would add years the table does not contain. Neither is legislated today.
Two limits are worth naming. Every figure here is for England, Wales and Northern Ireland, because "the Scottish Parliament sets Income Tax rates and limits for Scottish taxpayers". The allowance and the National Insurance thresholds apply across the whole UK; the bands do not. And the numbers cover salary alone, with no pension contributions, no salary sacrifice, no dividends and no student loan. A pension contribution reduces the income the frozen thresholds are applied to, which is the one lever in this arithmetic that sits with the taxpayer rather than with the Treasury.